The story
Founded by Ryan Ashley Brant in 1993.1
1993–2000: Formation and initial growth
Take-Two Interactive was founded by Ryan Ashley Brant (1971–2019), the son of media executive and Interview co-owner Peter Brant, and Mark E. Seremet, the former founder of Paragon Software. Ryan Brant had attended the Hotchkiss School and the Wharton School of the University of Pennsylvania, graduating in May 1992. He began his career in May 1991, working for his father as the chief operating officer of Stewart, Tabori & Chang, a publisher of illustrated books, until August 1993. As Brant wanted to forge his own path, he decided to create a video game publishing company. He stated "I wanted to get into a business where I could raise capital as a younger guy. In technology, people expect you to be a younger person." An initial US$1.5 million in funding was raised from his family and private investors. Take-Two was incorporated under the Delaware General Corporation Law on September 30, 1993, with Brant (21 years old at the time) as chief executive officer (CEO) and Seremet as president. The business was launched with assistance from John Antinori and other Paragon Software employees. Seremet sold his stake in the company in 1998. Early on, Take-Two had a location in Latrobe, Pennsylvania. The company initially acquired MicroProse's development team in Greensburg and became its development center. By June 1994, the company had acquired and absorbed InterOptica, a software publisher owned by Wan Chai and headed by Catherine Winchester (later Heald); the latter became Take-Two's first president. Later that month, Take-Two struck a deal with GameTek that would see the publisher distribute five of Take-Two's games worldwide. In August 1994, Take-Two acquired Amiga and Macintosh rights to some of its titles from MicroProse, including BloodNet and Master of Orion.
Starting with Star Crusader in September 1994, Take-Two found its first major success with games that included full motion video with well-known live actors performing the parts, following the success that Mechadeus had with The Daedalus Encounter which featured Tia Carrere. Take-Two hired Dennis Hopper, among others, to star in parts for Hell: A Cyberpunk Thriller (1994), which sold over 300,000 copies over the following year and established profit for the company. This was followed by Ripper (1996), of which US$625,000 of its US$2.5 million budget was used to hire actors such as Christopher Walken, Karen Allen, and Burgess Meredith. The success of both these games, as well as earlier titles, led to a publishing agreement between Take-Two and Acclaim Entertainment to publish Take-Two's titles, as well as obtaining overseas distribution. Take-Two also secured a license with Sony Computer Entertainment to publish on the PlayStation line of consoles. In February 1995, GameTek acquired a stake in Take-Two, aligning the studio with its own Alternative Reality Technologies. By July 1995, Take-Two had established its head office in the Silicon Alley area of New York City. Take-Two expanded in its Latrobe location and, in September 1996, took over the second floor of its office building, which had been occupied by the Chestnut Ridge Chapter of the American Red Cross.
Around 1996, the company was making about US$10 million, but Brant wanted to further expand the company, and made its first acquisition of Mission Studios and publishing its JetFighter III game in 1996. Brant decided to secure additional funds for acquisition by taking the company public. The company announced this intent in April 1997, looking to raise $8.2 million. The company had its initial public offering (IPO) on April 15, 1997, being listed under the ticker symbol TTWO on the NASDAQ stock exchange. The opening price was $5.50, above the expected $5, and on its first day rose to $5.75. From the IPO, the company gained about US$6.5 million along with US$4 million on venture fund promissory notes. At this time, Peter Brant had been the largest shareholder in Take-Two at 25% owned through Bridgehampton Investors LP, which also had Ryan Brant as general partner. The additional funds allowed Take-Two to acquire GameTek's European operations, its internal Alternative Reality Technologies studio (later renamed Rockstar Toronto), and the rights to GameTek's Dark Colony, The Quivering, The Reap, Jeopardy! and Wheel of Fortune games. The company hired Kelly Sumner, a GameTek executive director, as part of this purchase. Additionally, the company acquired Inventory Management Systems, Creative Alliance Group, and Alliance Inventory Management, three video game distribution companies that helped to extend Take-Two's reach into the retail market.
In the same year, Take-Two stepped in as the publisher of Monkey Hero. Its developer, Blam!, had been struggling financially after the game's original publisher, BMG Interactive, was shut down by BMG Entertainment (a unit of Bertelsmann), its parent company. Also that year, its development team was spun-off into GearHead Entertainment, before closing in 2000. In March 1998, Take-Two acquired all assets of BMG Interactive for 1.85 million shares (16% of Take-Two's common stock), worth about US$14.2 million. In the previous year, the United Kingdom-based DMA Design and BMG Entertainment had just released Grand Theft Auto, and while it financially performed well but was not a critical success in Europe, it had sparked controversy over the use of violence in video games, with United States Senator Joe Lieberman speaking out strongly against it. Seeing the opportunity to capture attention on the game, Brant had initiated the acquisition of BMG as to acquire the Grand Theft Auto property, and at the same time, contacted BMG's Sam and Dan Houser (both instrumental to getting Grand Theft Auto to market), Terry Donovan, and Jamie King to found a new label within Take-Two, called Rockstar Games for which to develop more titles like it. Electronic Arts' (EA) 2008 CEO, John Riccitiello, stated that, with the establishing of Rockstar, Take-Two effectively invented the "label" corporate structure, which EA followed into in 2008. With the rights to Grand Theft Auto, Take-Two expanded its publication into North America, and the game became Take-Two's first financial success with over 1.5 million copies sold. Around the same time, Mark E. Seremet had left the company after serving only five years as president of the company.
Take-Two also began taking on distribution capabilities, acquiring various distribution firms such as DirectSoft Australia for the Oceania market. Notably, in August 1998, Take-Two acquired Jack of All Games, an America game distributor, for about US$16.8 million. Take-Two subsequently bundled many of its existing and future distribution outlets under the Jack of All Games brand.
In 1999, Take-Two acquired DMA Design (ultimately renamed Rockstar North), and invested into Gathering of Developers and Bungie (eventually transferred over to Microsoft Game Studios). In September, the company also acquired Triad Distributors and Global Star Software, a video game distributor and publisher, respectively, both founded in 1993 by Craig McGauley and Damian Cristiani and operating out of the same offices in Concord, Ontario, with the same management team. Israeli developer Pixel Broadband Studios was acquired for $50.4 million in March 2000, before Take-Two sold it off to Gameplay.com in October that year, receiving £34.1 million in Gameplay.com shares in return.
2001–2006: Further acquisitions and regulatory investigations
In February 2001, Brant stepped down as CEO of Take-Two to serve as its chairman, being replaced in the former role by Sumner. Around this time, the company had 658 employees. With Rockstar, Take-Two invested into developments of sequels to Grand Theft Auto, including Grand Theft Auto 2 (1999), and Grand Theft Auto III (2001) along with sequels, Grand Theft Auto: Vice City (2002) and Grand Theft Auto: San Andreas (2004). By 2003, Take-Two had revenues exceeding US$1 billion. In 2002, the Take-Two name was dropped as a publishing label when the short-lived publishing label Gotham Games was introduced. In 2004, Take-Two paid US$22.3 million to Infogrames for the rights to the Civilization series. The company had also planned to acquire Vivendi Universal Games for $1 billion.
In 2005, Take-Two began a host of acquisitions, spending more than US$80 million buying game developers. One of its largest acquisitions was for the development studios Visual Concepts and Kush Games from Sega for about US$32 million in January 2005. Both studios had been extensively behind several sports simulation games, branded through ESPN, and typically released updated versions each year, using a 2K brand to differentiate versions (such as ESPN NFL 2K5). In 2004, Take-Two had struck a deal with Sega to help publish these titles. Just prior to Take-Two's acquisition, Electronic Arts announced it had secured the exclusive rights to create video games based on the National Football League (NFL) and a fifteen-year branding deal with ESPN, effectively killing Visual Concepts' own NFL title and devaluing their other games. This decision led Sega to abandon the sports-game market. Take-Two acquired these studios and unique branding (including the 2K brand), as well as negotiated for exclusive rights with Major League Baseball for video games. A day after announcing these acquisitions, Take-Two established its 2K publishing label to maintain the 2K brand, moving several planned games from its budget software label, Global Star, to 2K. Take-Two further realigned the other existing internal studios — Indie Built, Venom Games, PopTop Software and Frog City Software, and Take-Two Licensing — within this new structure.
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After the formation of 2K, Take-Two completed other major acquisitions. Firaxis Games was acquired in November 2005 for around US$27 million; Take-Two had already supported the studio by using its acquisition of the Civilization license to support publishing of Civilization IV. Irrational Games was acquired around January 2006 for about US$10 million, including both its Boston and its Canberra studio. At the time Irrational had already established a publishing deal with Take-Two for their upcoming BioShock game. With the deal, Irrational became part of the 2K label. It also acquired PAM Development from the Gaia Capital Group for US$11.4 million, giving it access to the Top Spin series of tennis games.
However, during this period, the U.S. Securities and Exchange Commission (SEC) began examining Take-Two's business records, based on complaints filed from 2001 that Take-Two's earnings did not seem to match figures of game sales reported by NPD Group. The SEC's formal complaint found that the company had purportedly sold products to distributors as a "parking transaction" for a quarter, as to artificially increase their revenues for investors, which it estimated was a US$60 million fraud. A lawsuit was filed against Take-Two in December 2001, alleging that the company had lied to shareholders. Take-Two initially restated seven quarters of past financial results in February 2002, then five years in January 2004. Brant stepped down as chairman in March, being succeeded by Richard Roedel. After the SEC's issuance of the complaint in 2005, Take-Two agreed to pay a US$7.5 million fine, along with Brant and other executives paying fines totaling around US$6.4 million. Brant, who had remained with the company in the non-executive role of "Vice President of Production", ultimately resigned from the company in October 2006, following a four-month disability leave due to a bad back. The company's co-founders later founded another small independent video game publisher GreenScreen Interactive Software in 2007.
In 2007, a separate investigation by the SEC found further issues with Brant and two other executives of the company. In an industry-wide sweep against options backdating (receiving shares when they are priced high but backdating their ownership to when they were priced low), the SEC had found Brant had received backdating options of over 2.1 million shares, though he had excised all options upon his 2006 resignation. Brant pleaded guilty to falsifying business records, but agreed to co-operate with the SEC and instead of receiving up to four years in prison, was fined US$7.3 million and barred from holding any "control management positions" in a publicly traded company. Brant died of cardiac arrest in March 2019 at the age of 47.
Further troubling Take-Two during this period was criticism and legal actions taken against the Hot Coffee mod, a user-made modification to Grand Theft Auto: San Andreas that unlocked a hidden graphic sex scene that was built into the game, with concerned politicians and consumers stating the scene belied the game's ESRB content rating. Actions taken against Take-Two included an investigation by the Federal Trade Commission for deceptive advertising, to which Take-Two and Rockstar settled in 2006 on fines for any future violations of content ratings. Take-Two completed a US$20.1 million settlement related to class-action lawsuits filed against it in 2005 over the Hot Coffee mod, as well as to a class-action lawsuit brought by shareholders over the options backdating fraud, in September 2009.
2007–2008: Shareholder takeover and attempted buy-out
A fire had damaged part of the Take-Two headquarters building in New York in 2006. In early January 2007, Take-Two relocated the headquarters for 2K to Novato, California to 65,000 square feet of space at Hamilton Landing, an office park that had repurposed the former hangar structures from the Hamilton Army Airfield. Later that year in September, Take-Two established a partnership with Nickelodeon and launched a new label, 2K Play, designed for publishing of family-friendly titles alongside 2K's 2K Games and 2K Sports sub-labels, absorbing the remaining publishing duties of the Global Star label. In December 2007, Take-Two established 2K Marin (named after Marin County, where Novato is located) and expanded its presence at Hamilton Landing.
Due to the various SEC investigations and the Hot Coffee controversy, investors in Take-Two discussed the possibility of taking over the company and ousting the current management at its next board meeting in March 2007. There were also issues with Take-Two failing to make its revenue targets, having lost US$163.3 million in 2006. Investors OppenheimerFunds Inc., S.A.C. Capital Management, Tudor Investment Corp., D.E. Shaw Valence Portfolios and ZelnickMedia held 46% of the company's stock at this point, and were looking to put ZelnickMedia's Strauss Zelnick as the chairman of the board while ousting long-standing management and board members. Zelnick had previously been president and CEO of BMG's North American division at the time of the sale of BMG Interactive to Take-Two, a move he had been against, believing that BMG could have capitalized on the video game sector more. Prior to BMG, Zelnick had been COO of 20th Century Fox and CEO of Crystal Dynamics. He founded ZelnickMedia in 2001 as a private equity firm to focus on media and interactive entertainment investments. Industry analyst Michael Pachter stated that a takeover would be best for Take-Two, as the present management "completely abdicated any responsibility for the oversight of the options-granting policy. A more responsible board would have committed hari-kari." CEO Paul Eibeler, who had replaced Brant after his resignation, had tried to find a buyer for Take-Two after the investors filed their intent with the SEC. Among the potential buyers were EA, but a deal could not be negotiated before the meeting. The takeover was successfully agreed to by stockholders on March 29, 2007, with Zelnick naming Ben Feder, a partner at ZelnickMedia, as the new CEO. As of July 2015, Strauss Zelnick is the largest single shareholder by voting power.
The company announced a major restructuring in mid-2007, following the takeover. With the move of the 2K labels to Novato, the executive, management, distribution and sales areas were evaluated to align these by business discipline rather than geography. Subsequently, the company let go about 5 to 15% of its approximately 2,100 employees, closed down some of its European offices and centralizing these in its Geneva location, and looked to get out of the distribution market by looking for buyers of Jack of All Games.
In mid-February 2008, EA made a US$25-per-share all-cash transaction offer worth around US$1.9 billion to the board of Take-Two, subsequently revising it to US$26 per share after being rejected and making the offer known to the public. At the time, Take-Two's stock was valued around US$10 per share. EA CEO John Riccitiello said that EA had previously considered a deal for Take-Two in the previous year when it was approached by Eibeler, however, with Activision's acquisition of Vivendi Games in December 2007, EA was looking to resecure itself as one of the top video game publishers with the acquisition of Take-Two. While Take-Two had been discussing the potential of a buyout to a large media company after the shareholder takeover, Zelnick and the board rejected the offer, with Zelnick stating "We didn't slam the door, we just said look, the price is not right and the time is wrong". Take-Two offered to discuss the offer after Grand Theft Auto IV's release on April 29, 2008, which many considered to be the lucrative property that EA desired. An acquisition would have ended EA's main competition in sports video games. EA continued to extend its bid offer throughout 2008, but by September 2008, EA decided to back away and let the offer expire, as Take-Two continued to call EA's cash offer as inadequate.
2008–2018: Continued growth
In September 2008, Take-Two established an outsourcing agreement with Ditan Distribution LLC, at the time owned by Cinram, a Canadian manufacturer of optical media. Through the agreement, Take-Two offloaded all distributing duties from Jack of All Games to Ditan, while establishing the means for Jack of All Games to license and distribute third-party titles. Subsequently, in December 2009, Take-Two sold Jack of All Games to Synnex for about US$43 million, leaving the distribution market and focusing solely on development and publishing.
In 2010, Ben Feder stepped down as CEO, and was replaced by Zelnick, who remains the company's chairman and CEO. In January 2013, while being dissolved, THQ sold the rights of the WWE wrestling games series to Take-Two. Subsequently, 2K Sports has published annual WWE 2K games as part of its lineup.
Around 2013, Take-Two began to repurchase about 7.5 million outstanding shares of the company (about 10%), based on the company's projections that it would remain profitable over the next several years. As part of this, the company bought back around 12 million shares owned by Carl Icahn, about 11% of the total shares, for about US$203 million. Icahn had been seen as favoring selling the company to a buyer. This subsequently led to three board members who had been recommended on the board by Icahn to resign. The move to buy back shares was seen by analysts of the company's assurance in Grand Theft Auto V, which was released in September 2013. Grand Theft Auto V has since sold nearly 100 million units by 2018, making it one of the most successful video games ever and bringing an estimated US$6 billion to Take-Two, increasing its stock value by more than 600%.
From Wikipedia’s article on Take-Two Interactive, shared under CC BY-SA 4.0.8